For the month of July, any SoFi customer who took out a home loan could receive free daily delivery of avocado toast. The lighthearted offer followed online chatter about an Australian real estate developer who suggested that millennials struggle to save down payments on houses because they pay $19 for avocado toast.
Weeks later in August and September, the financial-services company with nearly 200 employees in its Healdsburg office was hit with three lawsuits, one filed in Sonoma and two in San Francisco superior courts. Former employees of Healdsburg-based SoFi Lending or Social Finance (both known as SoFi) alleged sexual harassment, discrimination, retaliation for reporting sexual harassment in the workplace, defamation of the reporting employee, failure to provide meal periods, and other wage-and-hour violations. The wage-and-hour lawsuit seeks to form a class action.
The allegations in the lawsuits clash sharply with the company’s image of coolness as it markets financial services to graduates of top-tier colleges. SoFi’s Healdsburg offices, with open, relaxed décor and employees’ bikes propped along some walls, resemble the offices of high-tech companies in the SoMa (south of Market) neighborhood of San Francisco. Many employees regularly wear SoFi T-shirts.
On Sept. 14, Social Finance answered the wage-and-hour lawsuit, denying each allegation specifically, and seeking costs and attorney fees. Social Finance is represented by attorneys Felicia Reid and Christin Lawler in the San Francisco-based Hirschfeld Kraemer law firm. Plaintiffs in the wage-and-hour claim — Sean Pullen, Christina Cane, Michael Carrera, Matthew Taylor and Yulia Zamora — actually worked for SoFi Lending and not Social Finance, the company said in its answer. The case is scheduled for case-management conference in January 2018.
“Plaintiffs, or any individual they seek to represent, failed substantially to comply with all the directions of Defendant (including those directions regarding work schedules and taking meal and rest breaks), and such failure proximately caused the alleged losses for which relief is sought,” according to the SoFi answer. Employees are instructed to report any alleged improper or illegal activity, the answer stated. “To the extent Plaintiffs or any other putative class member(s) failed to avoid losses by reporting the same, they cannot now recover for such alleged loss.”
Maze of LLCs, corporations
Since its founding in 2011, SoFi registered several corporations and limited-liability companies in California, including: Social Finance, SoFi Lending, SoFi Wealth, SoFi Securities, SoFi Capital Advisors and SoFi Professional Loan Program. The various entities reflect the company’s rapid expansion into different business lines in financial services. LLCs are managed by Social Finance corp. SoFi Mortgage was formed in June 2014 then dissolved three months later. SoFi has offices in Healdsburg, San Francisco, Cottonwood Heights near Salt Lake City, and Delaware.
A few years ago SoFi created more than two dozen limited-liability companies using names of colleges nationwide with Social Finance Inc. as member-manager. For example, SoFi Fund for the Columbia University Community, LLC, was registered in Delaware in Feb. 2013 and cancelled in Oct. 2014. There were similar SoFi LLCs for Harvard University, MIT, Stanford University, Yale and University of California Berkeley. The company’s business model targeted high-earning graduates of college, initially to refinance their student loans then bring them an array of other financial services.
The privately held company grew fast, with numerous rounds of venture-capital funding and recent estimated valuation of about $4 billion. According to a statement from Val Hale, executive director of the Utah Governor’s Office of Economic Development in March 2016, “to date the company has lent more than $8 billion in mortgages, student loan refinancing and personal loans to over 125,000 members.” The statement indicates that the company also had offices in New York, Washington, D.C. and Helena, Montanta. “SoFi has indicated that the project will create up to 400 jobs over the next five years,” Hale said.